On August 22, 2017, a divided panel of the U.S. Court of Appeals for the District of Columbia Circuit vacated and remanded an Order by the Federal Energy Regulatory Commission ("FERC") approving construction and operation of the Southeast Market Pipelines Project. The decision was granted in response to an appeal from environmental groups. A group of landowners also filed an appeal, which was denied.

The Southeast Market Pipelines Project involves three separate interstate natural gas pipelines currently being constructed in Alabama, Georgia, and Florida. The project's overall aim is to serve the growing natural gas demand of Florida's power plants.

The petitioners challenged FERC's environmental review of the project under the National Environmental Policy Act ("NEPA") on various grounds. The Court held that FERC did not adequately consider the indirect effects of downstream greenhouse gases in its NEPA review. Specifically, the Court determined that, given the project's aim of serving Florida power plants, it is "reasonably foreseeable" that the gas transported via the project will be burned in power plants, releasing greenhouse gases that would impact climate change.

As highlighted in a Cadwalader Memorandum, because FERC has the authority to deny a pipeline certificate based on its potential environmental harm under section 7 of the Natural Gas Act, FERC's approval of the project is the "legally relevant cause" of environmental effects such as downstream greenhouse gas emissions. The Court found FERC was required to analyze the indirect and cumulative effects of downstream greenhouse gas emissions in its Environmental Impact Statement ("EIS"). The Court concluded that FERC should have either provided a quantitative estimate of downstream greenhouse gas emissions in the EIS or given a specific explanation as to why it could not do so.

Judge Janice Brown filed a partial dissent, and asserted that FERC was not required to analyze the downstream greenhouse gas emissions caused by increased power generation. 

The Cadwalader Memorandum was authored by Mark Haskell, Lamiya Rahman, and Brett Snyder.

Commentary / Mark R. Haskell

In the absence of rehearing en banc, FERC will need to address the issues identified by the panel majority on remand. As the D.C. Circuit has held, NEPA does not mandate particular results; NEPA prescribes a necessary process. Nothing in the majority opinion prevents FERC on remand from determining that the proposed projects remain in the public interest, once the additional elements identified by the majority are identified and addressed.

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